Rupee logs worst drop in 7 weeks vs USD

The rupee on Thursday slid by 45 paise, its worst singe-session drop in nearly seven weeks, to end at 61.86 against the greenback on month-end dollar demand from importers and banks amid speculation that US Fed is considering raising interest rates later this year.

Dollar demand from importers, mainly oil refiners, mainly affected the rupee value against the dollar, dealers said.

However, persistent foreign capital inflows into equity market restricted the rupee's fall, they added. Benchmark indices Sensex and Nifty on Thursday hit new highs.

The rupee resumed lower at 61.44 as against Wednesday's closing level of 61.41 at the Interbank Foreign Exchange (Forex). It moved down further to 61.88 before concluding at 61.86, showing a loss of 45 paise or 0.73 per cent. This is its worst daily show since 59-paise drop on December 16, 2014.

"Rupee fell against the dollar on month-end dollar demand by oil marketing companies. Today's fall came as the dollar strengthened against other global currencies as the Fed said the world's largest economy was poised for continued expansion," said Admisi Forex, Director, Suresh Nair.

The dollar index was up by 0.17 per cent against a basket of major global rivals after as the US Fed maintained its pledge to be "patient" on the pace of future rate gains at a meeting in Washington on Wednesday.

The yen pared declines as a slump in Japanese share prices spurred demand for haven assets. Australia's and New Zealand's currencies weakened amid speculation their central banks may be moving toward cutting interest rates.

Meanwhile, the benchmark BSE Sensex rose by 122.59 points, or 0.41 per cent, to all-time closing high of 29,681.77.